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Tuesday, December 3, 2013

In re Nance case brief

In re Nance case brief summary
556 F.2d 602 (1977)

CASE SYNOPSIS

A bankruptcy judge determined that
appellee bankrupt had converted property of appellant bank and that
the debt was non-dischargeable under § 17(a)(2) of the Bankruptcy
Act, codified at 11 U.S.C.S. § 35(a)(2). The United States District
Court for the District of Massachusetts held that the debt was
dischargeable because the assignment of deferred income was invalid
under Mass. Gen. Laws Ann. ch. 154, § 3. The bank filed an
appeal.

CASE FACTSThe bank argued that the district court
erred in ruling that the bankrupt's assignment of his claim to
deferred income was invalid for failing to comply with the conditions
set forth inMass. Gen. Laws Ann. ch. 154, § 3. The bankrupt alleged
that the debt was dischargeable because the bank never received an
assignment from him, and that, even if it had, his actions did not
amount to a willful and malicious conversion.

DISCUSSION

The court found that
the assignment of contract was plainly invalid as an assignment for
future wages and that the trust instrument, standing alone, could not
be construed as an assignment.

However, the court held that the
demand note, which consolidated all prior indebtedness into one
instrument, expressly listed the trust instrument as collateral
security.

The court found that the exemption from assignment in §
3 of wages to be earned in the future did not apply to income
the bankrupt had already earned but the receipt of which has been
postponed past the usual payment cycle.

The court also held that the
bankrupt's retention of the funds unreasonable and done deliberately
and intentionally in knowing disregard of the rights of the bank.

CONCLUSION
The court reversed the district court's decision.Recommended Supplements and Study Aids for Contract Law
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